AT&T said the number of activated subscriptions to streaming service HBO Max doubled in the fourth quarter to 17.2 million compared with the third quarter, partly due to the release of Wonder Woman 1984.
The number of overall domestic subscriptions to both regular HBO and HBO Max reached 41.5 million, which the company said was two years ahead of its initial forecasts and up from 34.6 million in the 2019 quarter. Before the May 2020 debut of HBO Max, AT&T said its five-year goal was to get 50 million total U.S. subscribers, and between 75 million to 90 million globally.
While HBO Max costs $15 a month for direct retail subscribers, existing HBO subscribers are entitled to activate their subscriptions at no extra cost. AT&T struggled in the early going with driving those conversions, especially with rivals launching far cheaper streaming alternatives. The company recently decided to substantially up the ante on streaming service (to the consternation of many in Hollywood) by putting the entire 2021 Warner Bros movie release slate on HBO Max at the same time it hits theaters. WW1984 followed that release pattern on Christmas Day. No data on its performance was shared in the earnings release.
HBO Max, which competes with other emerging services like Disney+, Apple TV+ and Peacock, benefited in the fourth quarter from a distribution deal with Roku, reached in December. A similarly game-changing distribution deal was struck with Amazon in November, finally opening access to the two dominant U.S. streaming providers.
The streaming news highlighted quarterly results that exceeded Wall Street forecasts, though they declined from year-earlier levels as the telecom and media giant continued to cope with the effects of Covid-19.
Earnings per share came in at 75 cents for the quarter ending December 31, compared with 89 cents in the same period in 2019, with revenue of $45.7 billion falling from $46.8 billion. Analysts had expected earnings of 73 cents and revenue of $44.6 billion.
The Mobility division powered the quarterly performance, with equipment revenue in that unit rising 28% to $6.1 billion. AT&T said the gains were due to smartphone sales, a mix of higher-priced postpaid smartphones and higher sales of postpaid data devices. The rollout of 5G services as well as new Apple iPhones helped boost quarterly results.
Revenue at WarnerMedia dropped almost 10% from a year ago, to $8.6 billion. AT&T estimated its TV and film revenue took a $1.6 billion hit in the quarter. Revenue at Warner Bros alone dove 21%.
Pay-TV subscriptions continued to slide, with 617,000 video customers lost in the quarter, though broadband growth offset the declines, as it has done in recent years. AT&T TV Now, the internet-delivered TV bundle which launched in 2016 as DirecTV Now, has been shuttered and AT&T is in talks to sell a controlling stake in DirecTV, which it acquired in 2015.
Video revenue declined 11% to $7.2 billion, which the company blamed on declines in premium and
OTT subscribers, partially offset by higher premium TV revenue per customer and a spate of election ads. On top of the challenge of operating during Covid-19, the company said the quarterly revenue number included estimated 2020 billing credits to be provided to subscribers for lower delivery of regional sports network programming.